Mortgage rates moved sharply higher today, more than erasing yesterday's improvement.  In fact, in one fell swoop, rates essentially moved from the bottom of 2017's range to the top!  There are a few caveats though.  First, 2017's range has been fairly narrow.  Beyond that, this is only the 3rd week of the year.  

As always, the notion of "abruptness" is subjective and relative.  In the bigger picture, rates are still in much better shape than late December levels.  In the more immediate picture, today's losses would make for a big adjustment to yesterday's quotes.  In some cases, borrowers might be looking at the next eighth of a percent higher in rate.  Several lenders have moved up to quoting top tier 30yr fixed rates of 4.25% whereas 4.125% had been the norm.

Loan Originator Perspective

The good news is that bond markets stayed within recent ranges today; the bad news is that we touched the upper bounds of those ranges, as opposed to yesterday's spot near the bottom.  Rates were slightly higher this AM, and several lenders worsened their pricing this PM as bond losses mounted.  Pricing has been quite steady for all of January, we'll hope that trend continues.  If you've got some time before closing and a measure of risk tolerance, floating here may bring some rewards since we're near the top of our recent ranges.  As always, if you're losing sleep over rate markets and spending more time watching bond movement than playing with your kids/dog, probably best to lock and relax.   -Ted Rood, Senior Originator

Today's Best-Execution Rates

  • 30YR FIXED - 4.125-4.25%
  • FHA/VA - 3.75%
  • 15 YEAR FIXED - 3.25-3.375%
  • 5 YEAR ARMS -  2.75 - 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • Rates had been trending higher since hitting all-time lows in early July, and exploded higher following the presidential election
  • Some investors are increasingly worried/convinced that the decades-long trend toward lower rates has been permanently reversed, but such a conclusion would require YEARS to truly confirm

  • With the incoming administration's policies driving a large portion of upward rate momentum, mortgage rates will be hard-pressed to return to pre-election levels until well after Trump takes office.  Rates can move for other reasons, but it would take something big and unexpected for rates to get back to pre-election levels. 
  • We'd need to see a sustained push back toward lower rates (something that lasts more than 3 days) before anything less than a cautious, lock-biased approach makes sense for all but the most risk-tolerant borrowers.  The beginning of 2017 may be bringing such a push, but there's no telling how long it will last.
  • As always, please keep in mind that the rates discussed generally refer to what we've termed 'best-execution' (that is, the most frequently quoted, conforming, conventional 30yr fixed rate for top tier borrowers, based not only on the outright price, but also 'bang-for-the-buck.'  Generally speaking, our best-execution rate tends to connote no origination or discount points--though this can vary--and tends to predict Freddie Mac's weekly survey with high accuracy.  It's safe to assume that our best-ex rate is the more timely and accurate of the two due to Freddie's once-a-week polling method).